for personal use only · •restructuring existing license agreements to control compliance for...

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Copyright © 2016 KPO

KALiNA POWER LIMITED (ASX:KPO)F

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Introduction To KALiNA Cycle®

• Electricity from waste heat represents a massive market and a global environmental priority

• A 4 Megawatt KALiNA Cycle® plant can offset upwards of 19,000 tonnes per year of CO2 in displacing coal fired electricity which releases around 500 kg/MWh (US Department of Energy)

• Generating electricity from waste heat is a multi-billion dollar international market currently addressed with a handful of companies using various iterations of the Organic Rankine Cycle (“ORC”).

• Market leader is ORMAT: (NYSE) / Market Cap ~ $2.1 Billion

• The KALiNA Cycle® is a proprietary industrial power process that can be 20-40% more efficient than ORC.

• KALiNA Cycle® has been successfully commercialised across a range of industries

• The Company has completed a restructuring to position the KALiNA Cycle® for global deployment:

• Eliminated over $12.5 million of external debt and simplified corporate structure

• Restructuring existing license agreements to control compliance for design and project execution

• New senior management, strengthened technical team and a revised board of directors

• Capital efficient, corporate partnering business plan to meet international demand

• Several transformative projects underway: each can create significant value to shareholdersFor

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KALiNA Cycle® Ready For Worldwide Deployment - $126 Million Spent To Date

Commercially Deployed In A Range Of Industries -15 Plants

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For a seven minute video tour of the KALiNA Cycle® Geothermal plant in Unterhaching, Germany,

please visit: www.KALiNApower.com

KALiNA Cycle® Virtual Plant Tour Explains How The Technology WorksF

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http://www.estl.com.au/

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KALiNA Cycle® vs Organic Rankine Cycle (ORC)

• ORC originally invented in 1960’s vs KALiNA Cycle invented in late 1980’s

• ORC and KALiNA Cycle® both use waste heat to boil a working fluid that have a lower boiling temperature than water. Boiled working fluid creates a vapour to drive a turbine to generate electricity; similar to the conventional steam cycle

• ORC installations have confirmed market demand for a rapidly growing multi-billion dollar sector

• ORC market leader ORMAT facing competition in ORC as patent protection was not aggressively maintained

• ORC working fluids are typically fixed concentrations of either Pentane, Butane or refrigerants like r134 or r245

• Some ORC working fluids are explosive, toxic, ozone depleting and limited for use in some jurisdictions

• KALiNA Cycle® working fluid is a variable mixture of ammonia and water which has many advantages:

• Adjustable concentrations of ammonia with water can address variations in the waste heat source and this allows optimized boiling temperatures that can result in improved performance of 20-40% over ORC

• Ammonia is not ozone depleting, not explosive and is accepted in wide use throughout the world.

• Ammonia and water have a similar molecular weight:

• vapour generated can be used with a wide range of turbine sizes (cost and performance efficient)

• Competitive capital costs and operating costs

• KALiNA Cycle® has extensive proprietary know-how and maintains a strong and growing patent portfolio

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HIGHLIGHTS OF TECHNIP STONE & WEBSTER TECHNICAL REPORT:

“The technology is robust, its advantages are substantial and given the extent oftechnology validation performed to date, Technip believes with appropriate technicaland commercial support, there is a potential for the KALiNA Cycle® to be adopted onan industrial scale worldwide”

“The sound thermodynamic basis of the performance and efficiency advantages of theKALiNA Cycle® technology in real-world settings have been successfullyvalidated…confirms that the technology is fundamentally efficient, reliable and safeand can be delivered across a range of heat-source parameters, including those oftenfound but generally not utilized in common industrial settings”

Tipping Point For Worldwide Deployment - Proven Technology

www.Technip.com

• 38,000 employees in 48 Countries.

• Range of services including for

Petrochemical and renewable

energy sector.

• 40 years experience in EPC,

commissioning, start-up and plant

testing.

• 2014 revenue of €$10.7bn

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http://www.technip.com/

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HIGHLIGHTS OF FROST & SULLIVAN MARKETS REPORT:

Frost & Sullivan report identifies over one million MWe global market with potentialUS$800 billion annual revenues (assuming a power price of US10 cents)

“Frost & Sullivan anticipates that the market for binary power generation systemsusing heat from natural or industrial sources (such as those using the KALiNACycle® technology) will grow extremely strongly…this is as a result of severalfactors:

•An increased focus on energy efficiency by industry, driven by increasing energycosts and an increasing desire by industry to use available energy sources;

•Government policies and programs encouraging the adoption of energyefficiency technology;

•Policies to encourage renewable energy sources, such as solar thermal andgeothermal; and

• Increased focus on lower temperature heat sources which will stimulate demandfor binary systems”

Tipping Point For Worldwide Deployment - Enormous Markets

ww2.frost.com

• 1,800 employees in 45 offices

globally.

• 360° Research is a core of their

service. Integrates seven

perspectives to provide complete

and overall view of factors that

impact industry.

• 50 years experience of research in

multiple industries to build expertise

to deliver information and solutions

to their clients.

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What Has Been Learned From 15 Plants Deployed And How To Achieve Success

• PAST PROJECTS:

• Projects that complied with KALiNA engineering design and equipment specification worked well

• Projects that utilized KALiNA engineering team and world class EPC firms were executed properly

• Sumitomo Metals, Fuji Oil and Unterhaching represent existing KALiNA Cycle power plants in a range of industries

that showcase the reliability of the technology when delivered well

• FUTURE PROJECTS:

• Repeatable success for global commercial deployment requires effective project delivery and execution

• Fulfilment partners provide complimentary skill sets to KALiNA’s engineering and technical team that will allow

repeatable delivery of reliable power plants to industry best standards

• Working with leading partners allows more rapid deployment of multiple projects with successful outcomes

• Preferred vendor partners provide high quality, standardised equipment for high performance, shorter lead times

and better inventory management to deliver optimised cost benefit outcomesFor

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Highlights Of Business Plan

• Targeting criteria:

• Markets and opportunities that are capital efficient: customer and third party funding available to minimise dilution to the Company. KALiNA Power ownership of future projects will be considered on selective economic criteria

• Markets where multiple project opportunities exist (ie Sinopec 100+)

• Markets with Supportive Regulatory regimes with either funding availability or legislated requirements:

• China (legislated energy efficiency), Japan (multiple sources of funding and legislated power prices), USA (states such as California – legislated renewable energy targets), Canada (grant funding, oil sands)

• New projects and active customers include: Sinopec, Japan Ministry of Environment and Taufkirchen in Germany

• Effective management of project execution and compliance of licensees:

• Recruitment of additional team members with track record of building successful companies and demonstrated success in developing and constructing power projects

• Delivering turnkey solutions to provide high quality, cost effective projects with management and oversight to ensure design and equipment specifications are met

• Select fulfilment partners working with KALiNA will provide engineering, procurement and construction to execute and deliver projects

• Using a turnkey licensing model provides attractive profit marginsFor

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• Capital costs for a 5MWe plant are ~ US$16.6 million (~US$3.325 million per MWe)*

• Operating costs fully burdened in the range of 7.6cents per kWh

Example of KALiNA Cycle Plant Economics

Annualised Costs (Cents Per kWh) Profitability of a 5MWe Plant at 15c per kWh**

Site Annual O&M Expenses per kWh 1.1 cents

Selling, Administrative and General Expenses

(SAGE) per kWh

0.7 cents

Twenty year Nominal Capital Cost per kWh 2.1 cents

Twenty year Nominal Cost of Turnkey Fee

and License

1.0 cents

Principal and Interest Cost per kWh 2.7 cents

TOTAL 7.6 cents

Annual Revenues @ 15 cents $6.2 Million

Annual Costs @ 7.6 cents $3.0 Million

NET PRE TAX INCOME $3.2 Million

*KALiNA Cycle Power Island only **Assumes operating capacity of 95%

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Sensitivity To Plant Size And Power Price

Plant Size

MweCost Per MWe

IRR* Across A Range Of Power Sale Prices

10 cents Kwh 15 cents Kwh 20 cents Kwh 25 cents Kwh 35 cents Kwh

0.5 $6,500,000 -3.6% -3.5% -2.9% 2.0% 13.0%

1 $5,000,000 -3.1% 4.2% 12.7% 19.5% 32.2%

5 $3,325,000 14.1% 26.9% 35.9% 44.6% 65.0%

10 $2,660,000 20.6% 33.3% 45.9% 58.8% 85.1%

* Assuming 100% Equity

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Turnkey Revenue Items Gross $ Per MWeKALiNA Proceeds

Per MWe

KALiNA Proceeds

5MWe

EPC Margin on overall project cost $250,000 $35,000 $175,000

Turnkey Fee / Engineering Services $500,000 $500,000 $2,500,000

Total$750,000 $535,000 $2,675,000

Recurring Annual Royalty to KALiNA* $40,000 $40,000 $200,000/year

How Does KPO Make Money With Its Turnkey Licensing Model?

* For near term projects with Sinopec in China it is anticipated that the royalty will be a one-off based on MW installed

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Structure – Designed To Deliver KALiNA Cycle Power Solutions

KALiNA

Power Ltd

Recurrent Engineering(to be named KALiNA Engineering)

Process development and International Support

for Projects

Sinopec

Projects

China

Projects

Project Execution

KALiNA Power

ChinaRest of World

BOOT#Licence

Royalty StreamRoyalty Stream

• Held through New Energy Asia Limited, a 75% subsidiary of KALiNA Power

• Future funding of business in China expected to come from investment

sources in China

Project Execution

49.9%*

non dilutable Class A shares100%**

** Asia region currently 75% via New Energy Asia Limited

# Build Own Operate Transfer

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• Government mandate requiring large industrial enterprises to achieve significant energy efficiencies

• KALiNA Cycle identified by Government as a priority technology to address energy efficiency

• Sinopec is the second largest company in the Fortune Global Top 500 (US$447billion revenue)

• First 4MWe KALiNA project at Sinopec petrochemical plant on Hainan Island is 80% complete

• KALiNA now overseeing project management to assist project completion in compliance with design specifications

• Scheduled for mechanical completion Q3, 2016

• Successful completion to act as blueprint for roll-out with Sinopec:

• Sinopec provides funds for each project making it capital efficient for KALiNA

• JV with Sinopec Engineering to deliver EPC construction for KALiNA plants to Sinopec projects

• Showcase KALiNA Cycle® for widespread adoption in China to meet mandated energy efficiency targets

• Hainan Island project expected to require a total of 8 KALiNA Cycle power plants

• Sinopec has over 1,000 industrial sites looking to achieve energy efficiencies

• Sinopec has identified an initial 22 petrochemical sites to utilize 100 KALiNA Cycle power plants

Why China – SinopecF

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KPO Pro-Forma Financials – EBITDA With Sinopec And ROW Global Market

Key Assumptions

• Completion of first plant in China at Sinopec Hainan and roll out of identified opportunities with Sinopec

• Agreements with key international engineering firms and preferred equipment vendors to enable global marketing and project execution• Additional ROW projects forecasted represent less than 0.001% of the global market identified by Frost & Sullivan

• Rest of World projects pay a recurring annual royalty to KALiNA Power of $40,000 per MW

NEW MEGAWATTS INSTALLED 2016 2017 2018 2019 2020 2021 2022 2023

PER CALENDER YEAR

China Projects 1 4 6 12 20 30 40 50

CHINA MW 4 16 24 48 80 120 160 200

ROW Projects 0 1.8 2.5 3 6 10 14 18

ROW MW 0 14 20 24 48 80 112 144

TOTAL NEW MW 4 30 44 72 128 200 272 344

CUMULATIVE MW 4 34 78 150 278 478 750 1094

Note: New projects costs incurred and costs recovered in current year: turnkey license fee and royalty received in following year

KPO INCOME STATEMENT

2016 2017 2018 2019 2020 2021 2022 2023

(Figures in USD) Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast

EBITDA* (879,490) (69,377) 8,840,114 18,347,624 31,403,889 58,272,838 92,600,149 128,226,558

* Estimates only based on number of potential MW installed – actual results may vary as formal contracts have not yet been entered into for future projects

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Ross MacLachlan, Executive Director • Thirty-five years of technology development and project funding as CEO and Executive Director, previously at Lignol Energy• Raised over US$100 million in both the conventional energy and alternative energy sectors• Former Director of Pristine Power which built over 600 MWe of projects eventually sold for US$300m to Veresen Inc

Mark Mirolli, Engineer, Chief Technology Officer • Twenty-five years experience in thermal power generation, design and construction and the leading expert on the KALiNA Cycle®

• Former Director of Technology Development for ABB Combustion Engineering

Tim Horgan, Solicitor, Executive Director• Former Counsel at Gillette and sat on its AMEE Operating Committee overseeing annual sales in excess of US$1.2 billion• Oversaw acquisition and worldwide licensing of the 2002 and 2006 FIFA World Cups for over US$1 billion in revenues

Jeff Myers, (proposed) Non-Executive Director• Senior Operating Partner of Stonepeak Infrastructure Partners, former founder and CEO of Pristine Power. • Led in the development, execution and operation of three gigawatts of independent power projects

Dr Malcolm Jacques, Non-Executive Director• International career across research, development and implementation of numerous energy technologies.• Worked previously at BP Ventures (UK), The Energy Laboratory, MIT (Cambridge, USA), Strategic Research Foundation (AUS)

John Byrne, Non-Executive Chairman• Thirty years experience in industrial project development and capital markets success • Founded Western Coal Corporation which was dual listed on AIM and TSX which was sold for over US$1 billion

George Yan, Chief Operating Officer – China • Senior project management professional with experience in China and North America. Founded 400+ employee EPC firm in China • Managed several, multi-hundred million dollar Oil Sands projects with Jacobs and Worley Parsons in Canada

Board and Management of KALiNA Power and China F

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Next 12 months:

• Secure additional capital raising

• Restructure contract for completion of Sinopec Hainan plant

• Appointment to board of industry leading directors

• Recruitment of additional key personnel

• Complete negotiations with multiple key EPC Fulfilment and Preferred Vendors partners

• Complete joint venture and agreements for roll-out of additional China plants

• Secure financing for Chinese operating subsidiary with funding from China

• Initiate construction of additional plants in China

• Secure international project funding for turnkey project execution

• Initiate joint marketing efforts with multiple EPC Fulfilment and Preferred Vendor partners in rest of the world

Key MilestonesF

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Disclaimer

Important Information

• This presentation may contain certain forward-looking statements that have been based on current expectations aboutfuture acts, events and circumstances

• These forward looking statements are, however, subject to risks, uncertainties and assumptions that could cause thoseacts, events and circumstances to differ materially from the expectations described in such forward-looking statements

• KALiNA Power Limited accepts no responsibility to update any person regarding any error or omission or change in theinformation in this presentation or any other information available to a person or any obligation to furnish the personwith further information

• The distribution of this document in various jurisdictions may be restricted by law. Any recipient of this document mustseek advice on and observe any such restrictions

• The information contained in this presentation is for general information purposes only and does not constitute an offerto issue, or arrange to issue, securities or other financial products

• All amounts including ‘$’ are in reference to US dollars unless stated otherwise

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Thank youF

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